New Delhi, Sept. 2 -- At first glance, India's sprawling microfinance industry - with more than Rs.3.35 trillion in assets and 110 million loan accounts - would seem to be an unlikely victim of the punitive 50% tariff imposed by the US on imports from India. Yet its fate is closely tied to the country's 63 million-odd micro, small and medium enterprises (MSMEs), which form the backbone of export-heavy sectors now under pressure.

Tariff shock

The US, India's largest export market, has slapped a 50% duty on imports ranging from textiles, gems and jewellery, leather, footwear to shrimps and fisheries. These are precisely the industries that employ millions of micro borrowers. With export orders drying up and factories slashing production, ...